Evaluating a Company's Financial Position before Selling Grain on Deferred Price Contracts
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Grain producers, and the firms to which they sell grain, use a number of contract types to transact, including cash or spot purchase contracts, forward contracts, and deferred price contracts, more broadly termed “credit sale contracts.” Credit sale contracts (CSC) differ from cash and priced forward contracts because they create a unique relationship between the parties: the seller becomes an unsecured creditor of the buyer, creating a potential for counterparty risk to the seller. As with all contracts, it is incumbent on all parties that they be aware of what the contract means and also the risk involved. This publication is intended to serve as a resource for producers who wish to evaluate the financial strength of the creditor company and the potential risk of default for grain sold on a credit sale.
Jacobs, Keri, "Evaluating a Company's Financial Position before Selling Grain on Deferred Price Contracts" (2017). Extension and Outreach Publications. 560.
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